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We’re still up in the air as to
what is going to pass in Europe but perhaps this week we will see.
Markets are looking very bearish right
now and the only thing that can save them would be another QE announcement
which I have an eerie feeling will come.
Remember last year on a Sunday we were
off huge in the futures as everything technical was pointing to lower prices
and we all awoke to a joint QE announcement of some $600 billion and the
markets rallied and literally robbed those with short positions.
That was really unfair and nothing short
of manipulation and I could see it coming once again in the near future in
order to stem a protracted move lower.
I wish the governments would step out of
the way and let things play out. They won’t be able to prop up markets
forever and when they lose control then the correction will be much more
violent and worse.
Later on I talk a bit about just what is
coming down the pipe for the US and how it could well the the
beginning of the end.
Being a long memorial day weekend we
have no market action in the US Monday. On that note let’s make this a
relatively short and quick weekend letter and then let the good times roll on
this holiday weekend!
Metals review
Gold fell 1.10% this past week in sloppy
action that is best avoided on a trading basis but this is giving physical
gold accumulators a prolonged chance to buy up as many coins and bars as they
can.
Gold seems to be building a little
triangle here now which could last a month or so but the much larger wedge
pattern is now clear and most important on this chart today.
I’m not really expecting much
action for a little while here unless Greece leaves the Eurozone soon or some
other systemic issue reaches it’s
boiling point.
It was nice to see the CME reduce
margins on gold last last week, now hopefully this
will loosen things up and allow it to rise once again. Friday was a good
start but gold has a long way to go but if a major systemic spark ignites a
fire then it could easily be at new all-time highs in a matter of days or
weeks.
Wednesday’s large move lower by
about $40 was pretty unnerving but then the metal of kings roared back later
in the day to close near break-even.
Many of the gold shares and definitely
the precious metal indexes look to have bottomed and did so in the face of
gold weakness. There is no doubt that the shares are massively sold out and
just about anyone who can’t handle the heat is now out of the kitchen.
Volume was very heavy on the move lower,
then higher Wednesday in both the futures and GLD ETF which tells me that
there is a lot of gold buying coming in near $1,540 and that looks to be our
low for the moment.
Time will tell but we are going to have
a very interesting summer in the markets and gold will be at the forefront.
Silver fell 0.46% this past week and is
building a similar little triangle to that of gold. The $29 level is going to
be key going forward and to me it looks like silver is going to break this
pattern before gold.
We’ve see silver leading gold
before and I think we are going to see another cycle like that once again.
When silver does lead gold we tend to
really rip quickly as we did when silver touched $50 briefly in 2011.
The analysis above can all change pretty
quickly and to be successful in market you must be able to change directions
quickly and act upon them but for now I am seeing that silver will emerge as
a leader soon.
Both the SLV ETF and the silver futures
saw the highest volume as it was hit hard on Wednesday before snapping back
strongly on the day. Buyers are present and ready to spend under $26.50.
Platinum fell 1.41% and looks now to be
heading lower. Last week I thought the low may be in but violating the low
this past week and putting in a lower low is not good.
Now we’re building a bear flag
which should end up taking us lower later in the week ahead.
Volume in both the PPLT ETF and futures
market was heavy on moves lower and light on up moves which
says one thing. We’re heading lower.
Palladium dropped 2.56% this past week
and must hold this level or else it will quickly move under $570.
Volume in the PALL ETF and futures was
heavy on the downside but the futures volume is interesting as it was very
heavy at the support level and it did not push the price lower. This tells me
we are seeing accumulation and that the low may well be in since the price is
not being moved lower on heavy volume. We should find out the answer to this
in the coming week.
Fundamental Review
A little noticed story this past week
came and went quietly when a roar or revolt should have rippled across
America.
Regulators are now attempting to put US
taxpayers firmly as the backstop to derivative trades and clearinghouses. Not
the banks who do the trades, the actual clearinghouses which should be
allowed to failed if they must be bailed out.
Recall, the derivatives market is way over a quadrillion dollars now and I can’t even wrap
my head around that number.
There is no way in hell the US can ever
pay off its debt without devaluing the currency to nothing as it is, so
imagine even small portion of a quadrillion dollars tacked onto this growing
debt bill.
And to make things worse they are trying
to make this potential taxpayer bailout extend to overseas trades!
It’s all quite complex and I
don’t pretend to understand it all and nor do those who may pass the
law but I do know that this is the ultimate measure to protect the so a
called 1% and screw the 99%!
Chances are US citizens are just going
to bend over and take it too. Are you going to just sit there and let all
your hard work be ruined?
I cannot stress enough how bad this is. If you’ve got a good chunk of
your wealth tied up in gold and silver you’ll be fine but make no
mistake about it, America is crumbling before your eyes and this may be the
straw that breaks the camels’ back if it passed.
Take all actions you possibly can to
protect yourself. Be selfish and spread the word and talk to your
representative. This measure will ruin America the beautiful.
More central bank gold acquisitions are
taking place all the time and who really knows what percentage of them are
actually reported. In a few months time I expect us
to get reports that during this period of weakness they were loading up even
more.
March saw the Philippines acquire 32.12 tonnes of gold which is their largest gold purchase in 3
1/2 year. They now report 194.241 tonnes in reserve
but that’s not counting the plundered and hidden Yamashita’s gold
loot of which its existence is highly debatable and will likely never be
proven but the Seagraves did write two intriguing books right up Indiana
Jones’ alley a while back.
Mexico, Kazakhstan and the Ukraine also
added to their gold reserves in April.
Indonesia is offering incentives for
companies to build smelters in the country in an attempt to reap further
benefits from their mineral wealth. It only makes sense really. I would want
the same thing if my land was being pillaged mainly by foreigners.
It’s nice to see the Godfather of
Gold, Jim Sinclair, or should we call him the GoldFather,
doing it right. In the midst of nationalizations and increased regulation and
taxes he’s made it easy in Tanzania by offering the country 45% of his
company. I assure you he’ll be taxed the lowest rate possible and given
every accommodation.
He knows what he’s doing and is
doing it in a responsible manner that will ensure it gets done.
I hope that was short enough for you on
this awesome long weekend, and still informative as
we move forward in this secular precious metals bull market.
Warren Bevan
www.preciousmetalstockreview.com
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